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Agency problems and goal conflicts

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  • Robert A. Eisenbeis

Abstract

Agency theory is used to evaluate how the European Union (EU) may deal with the resolution of goal and agency conflicts in dealing with failing financial institutions. Experience in the United States suggests that the financial and regulatory structure being put in place, which relies upon country-sponsored deposit insurance funds and home country responsibility for supervision and lender-of-last-resort functions, is not likely to be robust to the failure of a large EU institution that threatens the solvency of the deposit insurance fund or that poses systemic risk. The author concludes that the EU needs a centralized and common approach to dealing with troubled institutions.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2004-24.

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Date of creation: 2004
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Handle: RePEc:fip:fedawp:2004-24

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  1. Armen Hovakimian & Edward Kane & Luc Laeven, 2003. "How Country and Safety-Net Characteristics Affect Bank Risk-Shifting," Journal of Financial Services Research, Springer, vol. 23(3), pages 177-204, June.
  2. Randall S. Kroszner & Thomas Stratmann, . "Interest Group Competition and the Organization of Congress: Theory and Evidence from Financial Services', Political Action Committees," CRSP working papers 465, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  3. Robert A. Eisenbeis & Larry D. Wall, 2002. "Reforming deposit insurance and FDICIA," Economic Review, Federal Reserve Bank of Atlanta, issue Q1, pages 1-16.
  4. Edward J. Kane, 1987. "Who Should Learn What From the Failure and Delayed Bailout of the ODGF?," NBER Working Papers 2260, National Bureau of Economic Research, Inc.
  5. Prati, A. & Schinasi, G.J., 1999. "Financial Stability in European Economic and Monetary Union," Princeton Studies in International Economics 86, International Economics Section, Departement of Economics Princeton University,.
  6. Honohan, Patrick & Klingebiel, Daniela, 2003. "The fiscal cost implications of an accommodating approach to banking crises," Journal of Banking & Finance, Elsevier, vol. 27(8), pages 1539-1560, August.
  7. Dirk Schoenmaker & Sander Oosterloo, 2005. "Financial Supervision in an Integrating Europe: Measuring Cross-Border Externalities," International Finance, Wiley Blackwell, vol. 8(1), pages 1-27, 07.
  8. Edward J. Kane, 1988. "Changing incentives facing financial-services regulators," Proceedings, Federal Reserve Bank of Cleveland, pages 265-279.
  9. Richard Dale, 2000. "Deposit Insurance in Theory and Practice," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
  10. Kane, Edward J, 1977. "Good Intentions and Unintended Evil: The Case against Selective Credit Allocation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(1), pages 55-69, February.
  11. Asli Demirgüç-Kun & Edward J. Kane, 2003. "Deposit Insurance: Handle With Care," Working Papers Central Bank of Chile 227, Central Bank of Chile.
  12. Robert R. Bliss, 2003. "Bankruptcy law and large complex financial organizations: a primer," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 48-58.
  13. Thomas E. Pulkkinen & Eric S. Rosengren, 1993. "Lessons from the Rhode Island banking crisis," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 3-12.
  14. Kane, Edward J., 2003. "What kind of multinational deposit-insurance arrangements might best enhance world welfare?," Pacific-Basin Finance Journal, Elsevier, vol. 11(4), pages 413-428, September.
  15. J.G. Rotte & M.P.H. de Vor, 2001. "Report on Financial Management," Research Series Supervision (discontinued) 36, Netherlands Central Bank, Directorate Supervision.
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Cited by:
  1. Santiago Carbo-Valverde & Edward Kane & Francisco Rodriguez-Fernandez, 2008. "Evidence of Differences in the Effectiveness of Safety-Net Management in European Union Countries," Journal of Financial Services Research, Springer, vol. 34(2), pages 151-176, December.
  2. Gerhardt, Maria & Lannoo, Karel, 2011. "Options for reforming deposit protection schemes in the EU," ECRI Papers 4339, Centre for European Policy Studies.
  3. Frisell, Lars & Roszbach, Kasper & spagnolo, giancarlo, 2008. "Governing the Governors: A Clinical Study of Central Banks," Working Paper Series 221, Sveriges Riksbank (Central Bank of Sweden).
  4. Rungporn Roengpitya, 2008. "The Effects of Financial Deregulation on Bank Governance: The Panel Data Evidence of the 1990s," Working Papers 2008-08, Economic Research Department, Bank of Thailand.
  5. David G. Mayes, 2009. "Optimal Structures for Financial Regulation and Supervision," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 7(2), pages 7-12, 07.
  6. Holopainen, Helena, 2007. "Integration of financial supervision," Research Discussion Papers 12/2007, Bank of Finland.

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